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8935 N. Meridian Street
Suite 113
Indianapolis, IN 46260

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Barnes Financial Services

(317) 663-8452

 

Current Year Tax Law Changes

2024 Tax Season is Here!

 

Barnes Financial Services is excited to enter the 2024 tax season!  As always, we are ready to serve your financial needs with Tax Planning Strategies and Financial Planning Solutions. 

Let's Begin Now

The IRS announced that the 2024 tax season opened on Monday, January 29, 2024.  This is the official date that all electronic filing can begin.

Please don't hesitate to gather your tax documents and schedule your appointment today.  Call the office at (317) 663-8452 or use our Online Calendar to schedule your appointment.


What To Look for from BFS

2023 Client Checklist - For returning clients, your 2023 tax checklist was sent to you via email to remind you of the items you should pull together for your 2023 tax preparation.  If you did not receive it by January 31st or had difficulty opening the checklist, please contact us so we can remedy the issue.

Tax Tips - As with every year, you can expect Tax Tips throughout the tax season to further educate you and provide helpful hints for tax savings. This season's tips will continue to focus on a wide range of topics.


Important 2024 Tax Deadlines & Dates

Jan 15 - 2023 4th Qtr ES Tax

Jan 31- Employer Filings ( w-2,w-3,1099,1096)

Mar 15 - Corporate (1120S) 

Mar 15 - Partnership (1065) 

Apr 15 - Corporate (1120)

Apr 15 - Individual (1040)

May 15 - Non-Profit (990)


2023 Tax Law Updates

The Tax Cuts and Jobs Act (TCJA), passed into law 2017 and went into effect starting January 2018.  Since 2018, many changes have taken place and are still ongoing.  

Visit Barnesfin.com
to see a full list of the 2023 major tax law updates. These are broken down into three sections.

Income Changes
Deduction Changes

Credit Changes


Key 2023 Changes

  • Income Tax Rates. For 2023, there remains 7 tax brackets with new individual tax rates of 10%, 12%, 22%, 24%, 32%, 35% and 37%.


Standard Deductions

  • Single filers - $13,850
  • Head of household filers - $20,800
  • Married filing separately - $13,850
  • Married couples filing jointly -  $27,700
  • Qualifying Widow - $27,700


Form 1099K

  • Form 1099-K $600 reporting threshold delayed. This means that for 2023 and prior years, payment apps and online marketplaces are only required to send out Forms 1099-K to taxpayers who receive over $20,000 and have over 200 transactions.
  • For tax year 2024, the IRS plans for a threshold of $5,000 to phase in reporting requirements.

Child Tax Credit & Additional Child Tax Credit
  • For 2023, the maximum Child Tax Credit is $2,000 per qualifying child. The refundable part of the credit, Additional Child Tax Credit , is worth up to $1,600 for each qualifying child.
  • A credit of up to $500 is available for each of your qualifying dependents other than children who can be claimed for the child tax credit. 
  • Therefore, you may be able to claim this credit if you have children age 18 or over, including college students, children with a disability, or other older relatives in your household.
  • The qualifying dependent must be a U.S. citizen, U.S. national or U.S. resident alien. 
  • The total of both credits is subject to a single phase out when adjusted gross income exceeds $200,000, or $400,000 if married filing jointly.

Standard Mileage Allowance
 The standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 65.5 cents for every mile of business travel driven.
  • 22 cents per mile driven for medical or moving purposes.
  • 14 cents per mile driven in service of charitable organizations.


Alternative Minimum Tax exemption 

  • The Alternative minimum tax (AMT) exemption amount increased to $75,900 ($118,100 if married filing jointly or qualifying widow(er); $59,050 if married filing separately).
  • The income level at which the AMT exemption begins to phase out has increased to $539,900 or $1,079,800 if married filing jointly.
  • The bill eliminates the corporate alternative minimum tax.
  • This increase will result in fewer taxpayers paying AMT.


Health Care

  • Please note, for tax year 2019 and all subsequent years, the shared responsibility payment was eliminated.
  • If you need health coverage, visit HealthCare.gov to learn about health insurance options that are available for you and your family, how to purchase health insurance, and how you might qualify to get financial assistance with the cost of insurance.


Alimony Deduction Repealed

  • Alimony and separate maintenance payments are no longer deductible for any divorce or separation agreement executed after December 31, 2018, or for any divorce or separation agreement executed on or before December 31, 2018, and modified after that date.
  • Further, alimony and separate maintenance payments are no longer included in income based on these dates, so you won’t need to report these payments on your tax return if the payments are based on a divorce or separation agreement executed or modified after December 31, 2018.


Moving Expenses

  • The deduction for moving expenses is suspended.  During the suspension, no deduction includes the use of an automobile as part of a move.  This change is effective for the tax years of 2018 to 2025.
  • There is one exception. This suspension does not apply to members of the U.S. Armed Forces on active duty who move pursuant to a military order related to a permanent change of station. The expenses must qualify as a deduction that the government didn’t reimburse.
  • Also, employers will include moving expense reimbursements as taxable income in the employees’ wages because the new law suspends the former exclusion from income for qualified moving expense reimbursements from an employer.
  • In other words. unless you are a member of the U.S. military on active duty, you cannot deduct moving expenses and amounts reimbursed by an employer will be taxable income.

 

Changes to the Charitable Contribution Deductions

  • Effective for 2023, taxpayer must itemize to deduct charitable contributions.  The Tax Cut and Jobs Act increased the 50% AGI limitation to 60% for cash contributions.  Effective for 2026, the 60% limit goes back to 50%.


Earned Income Credit

  • The earned income tax credit, or EITC, is aimed at giving low- to moderate-income workers and families a tax break.
  • The dependent tax credit for 2023 is worth up to $7,430 with three qualifying children, $6,604 with two qualifying children, $995 with one quality child and $600 with no qualifying children.  The refundable portion of the credit also known as the additional child tax credit, maxes out at $1,600 in 2023. The amount you receive depends on your income, filing status, and how many children you have.
  • In 2023, you must have earned income of at least $$2,500 to even be eligible for the refund.
  • Effective for 2023, a taxpayer with no qualifying children has to be at least age 25 and under age 65 to qualify for the EIC.

Dependent Care Credit and Exclusion

  • In 2023, the dependent care expense limitation is $3,000 for one child and $6,000 for two or more children.  The credit is not a refundable credit. 
  • The credit equals a percentage of dependent care expenses ranging from 35% for taxpayers with AGI not over $15,000, down to 20% for taxpayer with AGI over $43,000, with every percentage in between.
  • You must have earned income throughout the year to qualify. Any money earned from pensions, foreign earned income, Social Security benefits, workers' comp, unemployment, investment income from interest or dividends or child support does not count.

Medical Expenses

  • Effective after December 31, 2019, distribution from HSAs and Archer MSAs for medical expenses are no longer limited to those medicines and drugs that are prescribed by a physician.
  • All medicines and drugs can be reimbursed tax free without a prescription or recommendation by a physician. Over-the-counter medicines and drugs include amount paid for menstrual care products.


Business Meals

  • Effective for 2021 and 2022 only, a taxpayer can deduct 100% of the cost of a business meal that is purchased in a restaurant.
  • As of January 1, 2023, that temporary incentive has expired, and the rules have gone back to a 50% deduction for most business meals.
  • Although the business meals rule has reverted back, entertainment is still not tax deductible.


Educator Expense Deduction

  • Educator expenses paid or incurred after March 12, 2020 also include the cost of personal protective equipment, disinfect and other supplies used for he prevention of the spread of COVID-19 in the classroom.


Visit 2023 Tax Law Updates for a more detailed list of the current tax laws.